BancorpSouth plan could cut workforce 10 percent

TUPELO – BancorpSouth Inc. could trim as much as 10 percent of its workforce through a voluntary early retirement program it says is part of the company’s efforts to cut costs and improve efficiency.
The company said it would take a one-time pretax charge of $8 million to $16 million, or 6 to 10 cents per share, during the second quarter. After that, BancorpSouth would save $7 million to $12 million a year, or 4 cents to 8 cents a share.
Reports surfaced earlier this week that the Tupelo-based financial holding company had identified employees within its 292-location, eight-state reach to make an offer to.
Arkansas Business said the voluntary retirement offer was extended to employees who were 60 and older with 10 consecutive years of service with the company.
In its statement Wednesday, BancorpSouth only confirmed the offer had been made to 418 employees – about 10 percent of its workforce – “who were eligible because they met job classification, age and length-of-service criteria as of March 31, 2013.”
The company said the retirement package includes pension plan “enhancements” based on each eligible worker’s age and years of service.
However, BancorpSouth’s senior executive officers and other key employees were not eligible for the program.
As of Wednesday, 296 of the 418 responded to the offer, of which 194 had accepted.
The remaining responses are due by May 23. The retirements are effective May 31.
BancorpSouth CEO Dan Rollins, who joined the company last November, said the voluntary early retirement offer was “part of an ongoing initiative designed to improve efficiency and reduce costs. We believe this program will appropriately recognize the contributions and
service of eligible employees who choose to participate, while also providing BancorpSouth an opportunity to improve its cost structure going forward.”
Employees to accept the offer can take a lump-sum payment of the pension plan enhancements, the company said. However, it noted that if the payouts exceed $16.7 million, BancorpSouth would take an additional $8 million to $13 million pretax non-cash charge.
BancorpSouth said it does in fact expect distributions to exceed the threshold, given the offers that have been taken so far and past experience.
The company said pension expenses could be reduced $700,000 to $1.2 million annually over the next 11 years.
It is BancorpSouth’s second major cost reduction and efficiency improvement plan in two years. In 2011, it closed 22 banking offices in six states as part of its “branch optimization plan.”
That affected about 100 employees, and the company said it expected to save more than $4 million a year with the closures.
dennis.seid@journalinc.com